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PLANO, Texas (DallasNews.com) – Developer Randy Heady, in partnership with John Eulich and John Landon, will bring the fourth and final office building to Plano’s Parkway Center. The team will break ground on the 158,000-square-foot, six-story office building in the next couple of weeks and plans call for delivery next March.

The speculative building will be a twin to the one purchased by AmeriVest. Ed Henry is the project’s general contractor. The stone and glass structure was designed by ANPH Architects.

CNL Poised to Purchase Majority Stake in Dallas Market Center

With a caution that the deal is still tentative, the Orlando, FL-based CNL Income Properties Inc. has put out word it's negotiating to buy majority interest of the 4.8-million-sf Dallas Market Center. If the deal closes, CNL will invest up to $71 million in cash into a new partnership.

Dallas Market Center Co. Ltd., an affiliate of locally based Crow Holdings, and CNL plan to form a partnership with $160 million of debt and $89 million of equity, according to a press release issued this morning. The partnership will own part of the real estate and leasehold improvements in the 3.1-million-sf World Trade Center, one-million-sf Dallas Trade Mart and 440,000-sf International Floral and Gift Center and a leasehold interest in the 214,000-sf Market Hall.

More details will follow, but Crow is poised to turn over up to 80% of majority interest in the center. Gina Norris, managing director of Crow Holdings, tells GlobeSt.com that CNL approached Crow Holdings about nine months ago about the possibility of a buy-in. "It has come fairly quickly for a deal of this size," says Norris, who's working with Anne Raymond, Crow's managing director and CFO, to fine-tune the trade. The closing, set to begin this quarter, is subject to CNL securing additional offering proceeds.

CNL's release says the tentative agreement will set up two long-term master leases with the existing management company, Market Center Management Co. Ltd., which will continue to manage the business, including the world-renowned trade shows. Banc of America Securities is CNL's financial adviser for the transaction.

"This real estate transaction provides a strong equity partner and positively positions us for additional opportunities to create improved markets and trade events," Bill Winsor, Dallas Market Center's president and CEO, says in the release. "To the extent other such opportunities arise that align with our business strategy, we would be pleased to further our relationship with CNL Income Properties." Among its mixed bag of high-profile holdings, Crow also owns the three-million-sf Brussels International Trade Mart.

Founded in 1957, Dallas Market Center now is considered the world's largest wholesale merchandise mart. More than 50 trade shows are held annually, attracting at least 200,000 visitors from 84 countries. Last year, five floors in the World Trade Center were retooled into Fashion Center Dallas, a state-of-the-art wholesale mart with 550 permanent showrooms and more than 650 temporary apparel exhibitors.

"Our partnership with Dallas Market Center is a good fit with our investment strategy," R. Byron Carlock, CNL president, says. "We're focused on this country's most prominent demographic influence--baby boomers--who, we believe will be spending even more of their time and income on themselves and their families as they continue to mature. We believe boutique and specialty shopping will be a big part of that trend."


WASHINGTON, D.C. (The Wall Street Journal) – Improvements landlords make to commercial buildings to accommodate their tenants’ needs can be depreciated over 15 years instead of 39 years, at least for 2005. The logic behind the law is that leases seldom last as long as 39 years. When new tenants move in, different improvements are needed. This tax rule is only good through the end of this year unless Congress reinstates it. Types of expenses that now qualify for the more rapid depreciation include such items as interior walls and lighting fixtures.

(recenter.tamu.edu) – The new law is especially kind to owners of leased restaurant buildings. If a leasehold improvement qualifies as a restaurant improvement, both a 15-year write-off and a 50 percent first-year bonus depreciation apply.

Nonrestaurant leaseholders lose the 50 percent first-year bonus depreciation but gain the shorter write-off period. An after-tax numerical analysis comparing the old law and the new law found that most taxpayers are worse off with the new law because they lose the first-year bonus deduction.


DALLAS, Texas (federalreserve.gov) – The Dallas Federal Reserve Board’s latest regional survey (beige book) concludes that economic activity in the 11th District, which includes Texas, continued to expand at a moderate pace from mid-November to early January. Demand for housing picked up from mid-November to early January, following a cooling that was reported in the last Beige Book.

Realtors and home builders expect a slightly slower year in 2005, and remain focused on the need for job growth to stimulate activity. Multifamily contacts said Austin's market continues on the road to recovery, but Houston and Dallas' apartment markets have been overbuilt and may not see improvement until mid-2005. There is still a lot of vacant commercial space, but contacts said office leasing continued to pick up at a slow, steady pace.


CARROLLTON, Texas (Holliday Fenoglio Fowler) – Lexington Corporate Properties Trust, an industrial and retail REIT, has obtained financing of $14.5 million for the acquisition of the 130,000-square-foot corporate headquarters of Carlson Restaurants Worldwide Inc. Holliday Fenoglio Fowler LP arranged the financing through Principal Global Investors. 

The property is a two-story, Class-A office building developed in 2003 for Carlson. It is on nearly 12-acres at 4201 Marsh Lane. The property is adjacent to International Business Park, just north of President George Bush Turnpike and west of the Dallas North Tollway.


COLLEGE STATION, Texas (recenter.tamu.edu) – In the real estate business, the first quarter of the year is usually slower than other quarters, and this year, industry professionals’ modestly optimistic expectations about first quarter 2005 are similar to those of previous years.

The latest Texas Real Estate Confidence Index (TRECI) is .54, or slightly better than neutral. It is down slightly (.01) from the fourth quarter survey but up a bit (.02) from the survey done one year ago. 

“The various real estate sectors are quite divergent in their business outlook,” notes Dr. James H. Leigh, TRECI project director and associate research scientist for the Real Estate Center at Texas A&M University. “While the commercial lender panel was very optimistic with a TRECI number of .83, the mortgage lenders had a negative reading of .34.”
For more information, click on TRECI on the Real Estate Center’s website, http://recenter.tamu.edu.


AUSTIN (Statesman.com) – According to a report released Wednesday from Colliers Oxford Commercial, 2004 marked a significant rebound for the Austin office market, as it posted the first net gain in occupancy since 2000. Both occupancy and rents rose in 2004 as about 1.2 million more square feet of office space was rented than was put on the market.

Average overall occupancy in fourth quarter 2004 was the highest since 2001 at almost 81 percent. Average rent rose 75 cents to $18.76 per square foot. Subleases, which proliferated after the tech bust, dropped 45 percent to 760,000 square feet of available space. In all, almost 7 million square feet of office space remains on the market.


THE WOODLANDS, Texas (GlobeSt.com) – Salt Lake City-based Huntsman LLC has subleased more than 26,000 square feet from Pantellos Group LP through 2006 in the 366,000-square-foot, Class-A Waterway Plaza office complex. The sublease brings the office complex on 10003 Woodloch Forest Drive to 96 percent occupancy. Pantellos has signed a long-term lease for its remaining 18,000 square feet in Waterway Plaza II, while Huntsman will incorporate the subleased space into its long-term plans after its expiration.


IRVING, Texas (GlobeSt.com) – Macquarie DDR Trust has purchased a 14 percent interest in two shopping centers for about $64 million from Developers Diversified Realty. The centers are located in Aurora, Colo., and Irving, Texas. The sale is the result of a plan and joint venture between the two companies that will lead to the sale of several properties to Macquarie.

MacArthur Marketplace in Irving, an almost 250,000-square-foot retail complex, is anchored by a Wal-Mart Supercenter, Sam’s Club, Kohl’s, Marquee Cinemas, Office Max and PetsMart. Neither the Wal-Mart nor the Sam’s Club were included in the transaction.

Project Revving Up for Las Colinas Retail Corner

Ground will break within two months on a 28,000-sf tract at a high-traffic intersection in Las Colinas, where dirt is fetching $8 per sf to as much as $25 per sf. The soon-to-start project, a 6,000-sf retail building, is 60% pre-leased.  The tract is the only open corner at the intersection of Cimarron Trail and MacArthur Boulevard. Great Lakes' neighbors are an upscale multifamily development, shopping center and high-end single-family homes.

Portrait of a recovery

Brighter picture emerges as D-FW firms shake off dreary period

By KATHERINE YUNG / Dallas Morning News

For Dallas-Fort Worth's biggest companies, the dreary economic landscape of the last three years is turning into a brilliant watercolor.

After struggling with sliding profits and sales, many of these firms swung back into the black last year. Others sharply cut their losses. And for many firms, 2004 could be the year they stanch the flow of red ink.

"Somewhere in the middle of 2003 was an inflection point where things began to get legs," said Mark Layton, chief executive of PFSweb Inc., a Plano-based provider of distribution, call center and back-office services that is in the midst of a turnaround.

For the first time since 2000, the 200 biggest publicly held companies in Dallas-Fort Worth saw their combined profits and sales increase.

The group's total net income last year nearly tripled to $25.6 billion, up from $8.6 billion in 2002.

Meanwhile, the combined revenue climbed almost 6 percent to $500.5 billion.

To be sure, Irving-based Exxon Mobil Corp. accounted for 84 percent of the group's total profits. But even excluding the oil behemoth, the rest of the area's largest firms earned $4.1 billion, a level not seen since 2000.

The numbers suggest an economic recovery in the making, experts say.

"We are just seeing the stirrings of growth now," said Mine Yücel, a senior economist and vice president at the Federal Reserve Bank of Dallas.

The rebound hasn't yet spread to all industries. Some of the local sectors still limping along include technology, manufacturing and information (broadcasting, Internet and printing businesses). Transportation, a leading source of employment in Dallas-Fort Worth, has shown mixed results.

But Ms. Yücel dismisses any doubts that the economy has turned the corner.

"Last year, we weren't quite sure yet," she said. "We think the future holds positive growth for us."

That kind of confidence is playing out in boardrooms across the area. Companies emerging from the downturn have shed unprofitable or secondary lines of businesses and are concentrating on what they do best.

"Companies that have survived have really got a very clearly stated and focused business strategy," said John Slocum, a professor of organizational behavior at Southern Methodist University's Cox School of Business.

Taking risks

The improving economy is encouraging many firms to take risks they had shunned in the past. Some are hiring workers – albeit slowly and carefully. Between the end of 2000 and December 2003, the Dallas-Fort Worth area lost about 132,300 jobs, according to a recent report by the Federal Reserve Bank of Dallas. And total employment among companies in the Top 200 declined about 9 percent in 2003.

But March marked the sixth straight month of job growth in Texas, according to the Texas Workforce Commission. And Dallas' unemployment rate, which climbed to 8.1 percent in June 2003, has been dropping. It stood at 6.2 percent in March.

The comeback is particularly evident in the Oil Patch, where surging prices for oil and natural gas have created a windfall for many firms. Several oil and natural gas companies made big advances in this year's D-FW Top 200 list, a ranking by revenue of the area's biggest publicly traded companies.

Among them: Pioneer Natural Resources Co. Profit at the oil and gas exploration and production company increased 15-fold last year, on top of an 83 percent jump in revenue. Pioneer's balance sheet is so strong that in April it began paying its shareholders a dividend.

"Our cash flow is up significantly in 2003 and 2004," said Scott Sheffield, Pioneer's chairman and chief executive. "We're investing a lot more money."

Pioneer is adding employees at its Dallas headquarters and has opened an office in Anchorage, Alaska. It's also planning to drill more than 400 wells, up a little from last year.

Bouncing back

But oil and gas companies aren't the only ones savoring better times. Growing demand for digital signal processors and other chips led Texas Instruments Inc. to start budgeting this year for employee profit-sharing payouts. That didn't happen the last two years.

After a $344 million loss in 2002, TI earned $1.2 billion last year. It's boosting spending on research and development, adding capacity for assembly and test capabilities, and making other investments. Already, it is projecting that capital expenditures this year will rise 18 percent more than originally estimated.

Like TI, SWS Group, the owner of Southwest Securities Inc. and other financial services firms, saw a return to profitability in 2003, thanks in part to renewed investor enthusiasm for the stock market.

Lean times caused SWS executives to concentrate on the company's core businesses, getting rid of everything else. The company sold off a technology services subsidiary and Mydiscountbroker.com, its retail online brokerage firm.

"It was really a chance to get more focused on areas where we felt we had a competitive advantage," said Donald Hultgren, SWS' chief executive.

The Dallas-based company is pouring new resources into its investment banking and retail operations. It opened offices in Oklahoma City, Houston and Austin. And it's adding two financial advisers a month at Southwest Securities.

Rising sales and profits aren't the only evidence of a rebound.

The 200 largest Dallas-Fort Worth companies also experienced an increase in their market capitalization, a new measure added to the rankings this year. Market capitalization is the value of a corporation determined by the number of outstanding shares multiplied by the current market price of each share.

The market capitalization of the D-FW Top 200 stood at $537.5 billion in 2003, with Exxon Mobil accounting for roughly half the value. Excluding the petroleum giant, the market capitalization of the rest of the group was $268.6 billion.

For many firms, the economy has gained steam so rapidly that a new set of worries has cropped up: the prospect of higher interest rates and soaring commodity prices.

"The only issue that has really put a little bit of a cloud over us is the price of natural gas," said Robert Best, chairman and chief executive of Atmos Energy Corp., a Dallas-based natural gas distributor serving utility customers in 12 states.

When natural gas prices spike, Atmos passes on the price increases to consumers. But that usually causes demand to fall, reducing Atmos' earnings.

Unlike many firms, Atmos bucked the recent downturn by continuing to grow its profits over the last few years. It has invested in new technologies and digested four acquisitions since 2000.


But not all companies fared as well. The shrinking size of firms in this year's Top 200 list made competition in the corporate world seem every bit as brutal as an immunity challenge on the television show Survivor .

It took sales of only $1.3 million to make this year's list, compared with $2.2 million a year ago. Five companies on last year's list, including former No. 5, grocery distributor Fleming Cos., wound up in bankruptcy court and out of the rankings.

Acquisitions and mergers also led to the departure of several local companies from this year's list, including Hotels.com, Hispanic Broadcasting Corp. and Packaged Ice Inc. And a few firms, such as former No. 20 Lennox International Inc., failed to stay in the rankings because of delays in filing their year-end financial statements.

Still, a number of companies were well on their way to a turnaround last year, including AMR Corp., the parent company of American Airlines Inc.

Few improvements were as striking as that of PFSweb. The outsourcing provider made the biggest leap in this year's Top 200 rankings, soaring to No. 76 from No. 116 last year as its revenue more than tripled.

Driving the sales gain: a profitable acquisition in late 2002, a strengthening economy and new customers. As a result, the firm's losses dwindled to $3.7 million from $11.4 million in 2002.

So far, PFSweb's investments in new technology appear to be paying off. In February, it announced it had won five new clients and renewed three key contracts.

"Our target is to show profitability this year," said PFSweb's Mr. Layton, noting that clients are expanding their products into new geographical markets.

'Not there yet'

But getting back into the black isn't enough for some companies itching to return to their glory days.

At TXU Corp., new chief executive John Wilder inherited a utility that transformed a $4.2 billion loss in 2002 into a $560 million profit last year. Still, he warned that it will take two to three years for TXU to completely turn things around and regain its position as one of the nation's top power and gas companies.

"We still have a good ways to go," Mr. Wilder said. "We have to build this company as a high-performing industrial company. We're not there yet."

To focus on its core electricity operations, TXU is shedding a number of businesses, including telecom, energy management outsourcing and gas transportation. The sales will enable the company to reduce by almost half its $12 billion debt.

"We've got great people here," Mr. Wilder said. "They know what needs to be done."



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